Orchard Brands Buys Crosstown

Multititle mailer Orchard Brands, a Golden Gate Capital company, last month agreed to buy most of the Crosstown Traders catalogs from Charming Shoppes.

Orchard Brands paid $35 million in cash for the Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Intimate Appeal, Monterey Bay Clothing Co. and Coward Shoe titles.

The deal did not include food gifts cataloger Figi’s, which Charming Shoppes plans to sell separately.

The acquisition brings the $1.1 billion Orchard Brands a step closer to blanketing the 50+ women’s market. The eight Crosstown titles are a good fit with Orchard’s Appleseed’s, Blair, Draper’s & Damon’s, Gold Violin, Haband, Norm Thompson, Sahalie, Solutions, Tog Shop, and WinterSilks.

Crosstown Traders was formed when JPMorgan bought the Arizona Mail Order apparel catalogs and Figi’s from Federated Department Stores in 2002. Charming Shoppes paid $218 million when it bought the catalog portfolio from JPMorgan in 2005.

Why is Charming Shoppes selling at a loss just three years later? The postage and paper increases during the past two years have cut into the profitability of all catalog companies, says Stuart Rose, managing director for investment bank Tully & Holland. Charming may not have moved enough of its business to the Web to help its bottom line.

And the slowdown in the consumer markets didn’t help either, Rose says.

“Financing is so hard to get,” he says. “Especially for mid-priced companies.”

Charming Shoppes plans to focus on its Lane Bryant, Catherines and Fashion Bug brands. It mailed its first 112-page Lane Bryant catalog in October 2007, when it got back the trademark to that title from Redcats USA.

The company also in September agreed to sell its misses-apparel-catalog credit-card receivables for about $40 million in cash to Alliance Data Systems Corp.




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